Reliance Industries, India’s largest company, struck a deal in 2019 to sell 20% of its oil-to-chemical business to Saudi Arabia’s Aramco, the state-controlled energy giant. The stake, valued at $15 billion, was to be one of the largest investments by a foreign company in India.
Now the deal appears to be off, apparently a victim of Reliance’s shifting priorities as it pursues a green energy future.
Reliance attributed the change of heart to the “evolving nature of Reliance’s business portfolio,” in a statement released on Nov. 19.
After decades in the fossil fuels business, Reliance announced in June a major investment in renewable energy. Chairman Mukesh Ambani said the company would invest $10 billion over three years to build four factories to manufacture solar photovoltaic modules, batteries, fuel cells, and electrolysers, for the production of hydrogen.
Reliance’s pivot to renewable energy followed Indian prime minister Narendra Modi’s 2020 pledge to reduce emissions by up to 35% and move 40% of India’s electricity generation to non-fossil fuel sources by 2030. Reliance is in line to supply up to a fifth of the nation’s green energy. The government is offering the private sector big subsidies to produce solar energy.
Reliance also has been buying up green energy companies, including a Norwegian solar panel maker it purchased for $771 million.
Aramco has its own climate agenda, which includes being “operationally” carbon neutral by 2050, a goal that refers only to its own energy use, not what it produces. Yet those ambitions do not appear to be aligned with Reliance’s.
In the statement, Reliance took pains to stress the companies were parting on good terms and that they had “a very deep, strong and mutually beneficial relationship.” In other words, after the breakup they hope to remain friends.